German finance minister accuses Greek leaders of 'destroying trust'

Wolfgang Schäuble says the behaviour of the Greek government is "incomprehensible"
as he arrives for a meeting of eurozone finance ministers

Wolfgang Schauble, German Federal Minister of Finance meets with other Finance Ministers to evaluate Greece's request for a new bailout packagePhoto: Rex

By Melanie Hall, Berlin

6:39PM BST 11 Jul 2015

Germany's finance minister has criticised the Greek government for destroying trust in "incomprehensible ways" as he joined a tense meeting of eurozone finance ministers.

Wolfgang Schäuble denounced the behaviour of Greek policy-makers as he arrived for Saturday's talks in Brussels. The ministers are considering new proposals from Alexis Tsipras, the Greek prime minister, for budget cuts and tax rises in return for bailout funds.

"We will certainly not be able to rely on promises," said Mr Schäuble. "In recent months, during the last few hours, the trust has been destroyed in incomprehensible ways. We are determined to not make calculations that everyone knows can't be trusted. We will have exceptionally difficult negotiations. I don't think we will reach an easy decision."

Mr Schäuble is understood to believe that Greece's latest proposals, which were approved by the parliament in Athens on Friday, are insufficient. One German official labelled them “a joke”, according to Bild, a German newspaper.

But Mr Schäuble's sceptical and cautious stance contrasts with Francois Hollande, the French president, who has hailed the Greek proposals as “serious and credible”. It also stands at odds with the relatively positive evaluation of Greece's "troika" of creditors - the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF).

In a three-page paper seen by Frankfurter Allgemeine Sonntagszeitung, a German newspaper, the troika are said to praise the new plan as a “basis for negotiations for a new European Stability Mechanism (ESM) programme”.

However, the institutions also make clear in the paper that Greece's proposed reforms, which should bring annual savings and additional revenue of 2.5 percent of national income, would not achieve the large primary budget surpluses that were agreed with the creditors.

The comments follow an admission from Mr Schäuble that Greek debts were too high and some write-offs - known as a "haircut" for lenders - was inevitable. “Debt sustainability is not possible without a haircut," said Mr Schäuble on Thursday.

But Yanis Varoufakis, the former Greek finance minister, accused Mr Schäuble of planning to force Greece out of the euro. Writing in the Guardian, Mr Varoufakis said that Mr Schäuble “is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly, a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has acquired a new usefulness for Schäuble".